Law Offices of Marc S. Henzel Announces Class Action Lawsuit Against Daimler-Benz AG
30 November 2000
Law Offices of Marc S. Henzel Announces Class Action Lawsuit Against Daimler-Benz AG
PHILADELPHIA, Nov. 30 A class action lawsuit has been
filed in the United States District Court for the District of Delaware on
behalf of all investors who tendered their shares of Chrysler Corporation
securities in connection with Daimler-Benz A.G. (now known as DaimlerChrysler
AG) acquisition of Chrysler .
The complaint charges that defendants Daimler-Benz AG ("Daimler-Benz") and
DaimlerChrysler AG ("DaimlerChrysler") engaged in a concerted fraud
orchestrated by defendant Jurgen Schrempp, the long-time chairman and chief
executive officer of Daimler-Benz, and implemented by that company's executive
inner circle, including defendants Manfred Gentz and Hilmar Kopper in order to
induce Chrysler shareholders to tender their shares of Chrysler to
Daimler-Benz.
As detailed in the complaint, Mr. Schrempp knew that Chrysler's directors
and shareholders would never approve a transaction if he told the truth,
namely, that a foreign corporation was seeking to acquire complete operating
control of one of America's "Big Three" auto manufacturers. Thus, Mr.
Schrempp falsely told Chrysler and its shareholders that Daimler-Benz
contemplated a true "merger of equals" in which Daimler-Benz and Chrysler
would operate as two equal companies with Chrysler's management continuing to
run U.S. operations and having parity in all respects with Daimler-Benz's
management, including equal representation on the management team of the
combined companies.
Daimler-Benz's assurances formed the foundation for the board's and
shareholder's decision to vote in favor of the business combination between
Daimler-Benz and Chrysler for two principal reasons. First, the value of the
stock which Plaintiff and all Chrysler shareholders would receive as part of
the merger depended on the continued leadership of Chrysler's management team,
which had brought Chrysler back from bankruptcy to an extremely profitable
operation in only a few short years. Second, the price or exchange ratio for
a "merger of equals" was well below the price or "acquisition premium" which
would have been paid to all shareholders of Chrysler, if the transaction had
been viewed by Wall Street as a traditional takeover. Had investors known the
truth, they would never have agreed to vote all of this shares for the merger.
Having secured the approval of Chrysler's board of directors, Mr.
Schrempp, with the assistance of Messrs. Gentz and Kopper, solicited all of
Chrysler's public shareholders by causing Daimler-Benz and DaimlerChrysler to
prepare and file a registration statement with the SEC in August 1998 that
repeated and reinforced all of Daimler-Benz's earlier promises to Chrysler and
plaintiffs. The strategy succeeded because, at a meeting held in September
1998 in Wilmington, Delaware, Chrysler's stockholders approved the merger by a
wide margin and the transaction closed in November 1998.
Unbeknownst to investors, defendants never intended the transaction to be
a merger of equals and never intended to have Chrysler run as an independent
and co-equal operation. To the contrary, defendants always intended to
relegate Chrysler to the status of a "division," and always intended to
replace Chrysler's management with executives from Daimler-Benz's headquarters
in Stuttgart. This plan culminated on Friday, November 17, 2000, when Mr.
Schrempp fired James P. Holden from his post as chief executive officer of
Chrysler's operation in North America, and replaced Mr. Holden with Dieter
Zetsche and Wolfgang Bernhard, two of Mr. Schrempp's former confederates. All
told, by Thanksgiving, Mr. Schrempp had fired almost all of Chrysler's top
executives and now feels free to exercise openly his control over the combined
companies. His cavalier attitude toward the American executives who believed
his prior promises and the welfare of Chrysler's employees has so devastated
the company that Mr. Schrempp has been forced to apologize to over 400 of
Chrysler's managers to maintain order and in an effort to prevent the further
downward spiral of DaimlerChrysler's stock which has dropped approximately 18%
in the last three weeks.
Importantly, in an interview with the Financial Times, published on
October 30, 2000, Mr. Schrempp confessed that he lied because he knew that
Chrysler's management never would have approved the transaction if they were
told that he planned to relegate Chrysler to a mere "division" of
DaimlerChrysler along with other operations of pre-merger Daimler-Benz.
Cynically describing his strategy of deception, Mr. Schrempp is quoted as
saying:
"Me being a chess player, I don't normally talk about the second or third
move. The structure we have now with Chrysler (as a standalone division) was
always the structure I wanted . . . . We had to go a roundabout way but it had
to be done for psychological reasons. If I had gone and said Chrysler would
be a division, everybody on their side would have said: `There is no way we'll
do a deal.' But it's precisely what I wanted to do. From the start
structure, we have moved to what we have today."
Plaintiff seeks actual damages which include the acquisition premium that
defendants denied investors, under Section 10(b) of the Securities Exchange
Act of 1934; an award of "rescissory" damages representing the difference
between the value of the common stock of Chrysler that investors exchanged in
the merger and the present value of the stock that investors now own in
DaimlerChrysler, under Sections 11 and 12(a)(2) of the Securities Act of 1933;
to award of compensatory and punitive damages in an amount sufficient to
punish and make an example of defendants for lying to Chrysler's shareholders
and the investing public at large, under common law fraud and conspiracy; and
to unwind the transaction in order to allow Chrysler once again to exist as an
independent corporation owned by Chrysler's shareholders and to return all
value, including distributions, which DaimlerChrysler caused Chrysler to
transfer since the merger, under Section 14(a) of the Securities Exchange Act
of 1934.
If you tendered Chrysler securities during the relevant time period, you
have until January 29, 2001 to participate in the case and ask the Court to
appoint you as one of the lead plaintiffs for the Class. In order to serve as
lead plaintiff, you must meet certain legal requirements. You do not need to
seek appointment as a lead plaintiff in order to share in any recovery.
If you have any questions concerning this case or your rights or interests
with respect to these matters, please contact: Marc S. Henzel, Esq. of The Law
Offices of Marc S. Henzel, 210 West Washington Square, Third Floor
Philadelphia, PA 19106, by telephone at (888) 643-6735 or (215) 625-9999, by
facsimile at (215) 440-9475, by e-mail at Mhenzel182@aol.com or visit the
firm's website at http://members.aol.com/mhenzel182.